Can you get equity release on a freehold flat?

What is a freehold flat?

All properties will have a freeholder, who will own the land on which the property is built. With flats, you will likely have a lease in place too, which covers shared areas (including the roof, stairways, lifts, gardens).

But this isn't always the case.

A freehold flat is one without any leasehold title.

It is unusual to find freehold flats due to the problems that arise with responsibility for shared areas and structural maintenance.

With a freehold flat in a building where all the apartments are freehold, you are reliant upon your neighbours to maintain their part of the structure. Yet, there is no explicit legal agreement in place to force each owner to carry out those repairs, or indeed, to share any such costs.

Owners of freehold flats can, therefore, run into difficulty when major structural problems arise with the property. Unless there is a legal agreement between the owners of adjacent freehold flats, there could be huge problems when agreeing on structural repairs and ongoing maintenance costs.

It is important not to confuse freehold flats, to leasehold flats where you also own the freehold.

If you also own the leasehold, you will be able to proceed with an equity release based on the lease in place.

Click here to read my guide on equity release for leasehold properties.

How do I find out if a lease in place?

There are several ways to find out if your property has a lease in place.

For properties registered with the land registry, the easiest way is to complete a title search. Separate title deeds will be listed for both freehold, and leasehold. It is even possible to obtain a copy of the lease agreement if the property is registered with the land registry too.

We can conduct a search of the land registry for you free of charge. Contact us, and we will be able to help find out if you have a lease in place.

Alternatively, if you are making any ground rent payments to a landlord, or service charges to a management company, a lease is likely in place.

Can I get equity release if I own a share of the freehold?

Freehold flats should not be confused with owning a share of the freehold.

Again, you can own a share of the freehold and also own the leasehold.

If you also own the leasehold, you will be able to proceed with an equity release based on the lease in place.

Click here to read my guide on equity release for leasehold properties.

Let's explore the share of freehold ownership a little further.

It may well be that you have agreed with the other flat owners in your block to purchase the freehold of the building from the current freeholder.

In this situation, you will become the landlord and tenant. This is because you will own a share of the land/freehold (landlord) and you will have a lease on the flat that you own (tenant).

As a freeholder with the other flat owners, you are then able to take over the management of the building maintenance and set up your own management company. It is to this new management company you will pay your service charge.

Having a share of the freehold also means that when it comes to extending the lease on your flat, it will be much more cost-effective. As freeholders, you will be able to set the lease extension price yourselves. It is often a token fee, with the individual just covering the legal costs.

You will also have more control over maintenance costs owning a share of the freehold, in that you may choose who carries out the work and who provides your buildings insurance. Owning a share of the freehold may also increase the value of your property when it comes to selling.

When you have a share of the freehold along with ownership of your flat as a leaseholder, you will be able to take equity release on your property.

I have written another guide all about equity release for leasehold properties. Click here to read my guide.

Can I get equity release if there is no lease in place?

If there is no lease in place on your flat, you will likely need to have a leasehold title drawn up to obtain an equity release.

You will require advice from a solicitor, and you will need approval from all other freeholders in the building.

Alternatively, if you own the freehold but there are leases set up on the other flats, some lenders are happy to charge the freehold title.

In England and Wales, we recommend Barton Law solicitors who can provide you with equity release advice. Barton Law will also be able to assist you with any leasehold queries and can help construct the leasehold title.

Barton Law
Leeward House
Exeter Business Park
Fitzroy Rd
Exeter EX1 3LJ

Phone: 01392 241 277

Website: www.bartonlawltd.co.uk

Peter Barton
Managing Director

But why would there be no lease in place?

The most common reason that I see freehold flats is where a house has been previously split into apartments. If the original freeholder has not sold on any of the flats, then it may have been deemed as no need to set up individual leasehold titles.

If you find yourself in this situation, you may need to arrange for the individual leases to be setup.

The lease can be constructed alongside the equity release application, and it will be on the new lease that the lender will underwrite the plan.

Alternatively, if you own the freehold but there are leases set up on the other flats, some lenders are happy to charge the freehold title.

If you are concerned about any aspects of your lease, or if you have no lease in place, book your free consultation with one of our specialist advisors.